Coca-Cola Volumes Dip in Key Markets: Premium Pricing to Save the Day?

The Coca-Cola Company KO faced notable volume pressure in the key markets in second-quarter 2025, reflecting evolving consumer behavior and economic challenges. Total unit case volume fell 1% year over year, led by declines in Mexico, India and Thailand. Adverse weather, geopolitical tensions and softer consumer demand weighed heavily, while markets like Indonesia and Vietnam also saw weaker consumption. In developed markets, like North America and Europe, volume softness reflected persistent inflationary pressures, particularly among value-conscious consumers. 

In North America, unit volumes slipped 1%, with away-from-home channels and retail price sensitivity impacting trends. Europe volumes contracted in the mid-single digits, as softer macro conditions reduced purchase frequency. Latin America volumes declined 2%, pressured by affordability challenges and competitive intensity in Mexico and Argentina. The Asia Pacific volume fell 3% amid sluggish recovery in China and Japan, while the Bottling Investments segment saw a 5% drop. These broad-based challenges highlighted waning momentum, especially among lower-income segments. 

However, Coca-Cola’s resilience emerged in its ability to offset softer volumes with stronger revenue growth. Organic revenues rose 5%, supported by a robust 6% price/mix, with about five points coming from pricing actions across the marketplace. Despite volume pressures in several markets, the company’s ability to command premium pricing underscores the strength of its brand portfolio and execution discipline.

Strategic revenue growth management and affordability initiatives, combining affordability measures with premiumization, helped balance pricing with consumer retention. Initiatives such as mini-cans, single-serve packs, refillables and targeted pricing helped balance consumer reach with value capture. Meanwhile, premium offerings, including Coke Zero Sugar, fairlife and BODYARMOR, continued to perform well, underscoring brand strength.

While volume softness underscores macro headwinds, Coca-Cola’s ability to harness premium pricing and execution discipline reinforces the durability of its growth model.

Volume Pressures vs. Pricing: How Peers PEP & KDP Cope?

Like Coca-Cola, beverage giants PepsiCo Inc. PEP and Keurig Dr Pepper Inc. KDP are grappling with volume headwinds, but their reliance on pricing power and portfolio strategies highlights how each is navigating the slowdown.

PepsiCo faced volume pressures in key markets in second-quarter 2025, reflecting subdued category demand and shifting consumer preferences. North America beverages saw modest declines, weighed by softer away-from-home consumption and retail price sensitivity, while certain international markets experienced uneven momentum. Despite these challenges, PepsiCo leaned on premium pricing, revenue management and innovation, particularly in Pepsi Zero Sugar, functional hydration and portion-controlled snacks. These strategies, supported by focused execution and affordability initiatives, helped offset volume weakness and sustain revenue growth.

Keurig Dr Pepper also experienced volume pressures in second-quarter 2025, as softer at-home coffee consumption, weather-related disruptions in Latin America, and competitive intensity in U.S. packaged beverages weighed on trends. However, KDP offset these challenges through disciplined pricing, mix benefits, and its premiumization strategy across coffee systems, flavored sodas, and enhanced waters. By emphasizing innovation, affordability in smaller pack formats and revenue management discipline, KDP sustained top-line momentum despite volume softness, highlighting the resilience of its brand portfolio.

The Zacks Rundown for Coca-Cola

KO shares have risen 9.8% year to date compared with the industry’s growth of 4.7%.

From a valuation standpoint, Coca-Cola trades at a forward price-to-earnings ratio of 21.78X, significantly higher than the industry’s 17.81X.

The Zacks Consensus Estimate for KO’s 2025 and 2026 earnings implies year-over-year growth of 3.5% and 8.3%, respectively. Earnings estimates for 2025 have moved up by a penny in the past 30 days, while the EPS estimate for 2025 has been unchanged.

Coca-Cola currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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